Share!The US Treasury completed the settlement of its biggest slug of supply in a while on Thursday and Friday, and the markets yawned. Stocks saw minor pressure. Bonds were firm, as they have been for the past 2 weeks. Download this report to learn what may be behind that and what to look for in…

Share!Cycle screening measures strengthened on Friday, following through on the gains of this week. Under normal circumstances, when these measures strengthen against a down day in the market, it usually means the rally has further to go. However maybe this time is different. Download this report to view the charts, tables, and a succinct analysis…

Share!The market pulled back slightly on Friday, setting up a new potential short term downtrend channel. That channel should either be validated or broken early next week. Download this report to find out what needs to happen for clearer short term signals and why calling the intermediate and longer term trend is even more difficult.

Share!Withholding tax collections have weakened in July, breaking down from the narrow range of 5-6% annual nominal growth they had been in throughout the second quarter. The nominal growth rate declined to +2.4% this week, which is near or below zero growth in real terms, depending on what you believe the inflation rate to be.…

Share!Cycle screening measures strengthened on Thursday, following through on the earlier gains of this week and suggesting that the rally has further to go. However, the trading range has become so thin after so many crossings over a period of months that it is virtually frictionless. These indicators gave little forewarning of a turn at…

Monthly Archives

Does Electric Power Generation Hold the Key to Revealing the Real Trend of the US Economy?

The Fed reports data on electric power generation and distribution as part of its monthly report on Industrial Production. The not seasonally adjusted year to year data for February (actual) showed a gain of nearly 5% from last February. That’s a steep increase from the 0.5% gain in December and 0.3% in November, suggesting massive strength in the US economy. But much of the increase is probably weather related as February 2012 was very warm in most of the country, and this year saw record cold in some parts of the country. That would cause increased demand for electric heating and lighting this year versus last year’s reduced usage due to the warm weather.

Overall, the trend has been flat since 2007, interrupted by a 5-10% dip during the 2008-09 recession.

Electric Power Generation – Click to enlarge

I like this indicator because it reflects everything that goes on in the US economy. It is a proxy for combined business and personal consumption activities. The long term view of this indicator suggests that the economy has done nothing in the past 3 years in a supposed recovery.

There may be another explanation for the apparent sluggishness. It may be due to increasingly energy efficient lighting, air conditioning, and refrigeration. The changeover to compact fluorescent lighting may be a contributing factor to keeping rates of gain below the levels of the past. Americans are wasting less electricity and it is difficult to isolate that factor from the impact of declining or stagnant economic activity. At some point the conservation trends will level out and this indicator should again do a better job of reflecting the trend of the economy. April is usually the low point of the year so it will be particularly interesting this year to see if the low comes in higher than the 2011 and 2008 lows. That would suggest that the economy is growing.

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